Another great decision by the Reserve Bank of Australia Board that all Australian home owners will be cheering about. On 2 September, the Board decided to leave the cash rate unchanged at 2.5 per cent.
This gives mortgage owners a chance to continue to add additional money into their mortgage without the funds being chewed up by high interest charges.
And because of this, mortgages will be paid out much quicker. In some cases, if a mortgage owner adds an additional $200 a week into their mortgage. They might be able to chop five years, off their total loan amount. Can you imagine not paying a mortgage repayment anymore? Well, if you pay extra in your mortgage while taking advantage of the low interest rates, you could be living without a mortgage much sooner than you except.
The things you could do with that extra money. Maybe even put it towards a holiday home, or investment property, or building your super, or just taking a wonderful holiday somewhere.
Sooner or later, interest rates will climb again. There is no doubt about that. So taking full advantage of the low interest rates now, is in your favour.
Pending on who your mortgage is with, you might be able to put the additional payments into a redraw facility, in case down the track you need to use it for an emergency.
Some mortgage owners put their additional funds into a savings account to earn interest. But say $5,000 in savings a year, you earn $100 in interest and then taxed from the interest you earned. Would it be more for your end pocket if your savings were put against your mortgage?
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